8 Steps To Making Your Business Growth-Friendly

real estate investingThinking big is important but when your business is just getting started, it can be easy to forget to implement processes that will help you grow later on. Even if you’ve already been in business a while, it’s not too late to start making your business more growth-friendly.

Here are 8 ways to get you moving in the right direction:

1. Review your renumeration strategies

When discussing renumeration strategies we need to look at things such as whether dividends or salary should be paid and how your share structure is setup. Don’t just let your strategy follow what you did in the previous year. Analyze it. Changes are happening all the time in tax laws and make sure that you follow those changes and try to be in front of those changes as much as possible.

2. Review your GST and PST status

Despite the BC HST repeal that just past, there are a lot of companies that yet to review their GST & PST status. You don’t have to be a psychic to predict a lot of headaches coming next tax season for those who dropped the ball.

If you sell outside of BC, you also need to know the rules of each province so you’re following the GST and PST laws. The penalties associated with not filing these correctly are very high so you want to make sure you’re doing it right.

3. Ensure research and development costs are identified and claimed

You’ll probably find that most companies in Canada are doing some level of research and development. Whether or not it’s worth the headache and energy to apply for R&D grants, that’s a decision that needs to be made but if you don’t track the costs associated with that R&D then you can’t claim it.

If you think that there is going to be a project that would require research and development, take the time and energy to come up with the process to keep track of the information ahead of time so you can claim it, if it’s claimable.

4. Watch out for fraud

It’s unfortunate that we even have to discuss this but fraud is an area we have to be aware of. You can’t close your eyes and assume everybody is doing everything correctly in your business.

Make sure that you have systems in place to protect you and your employees. If you don’t have systems in place to protect your employees then there will always be the potential for theft and fraud. Making sure your processes are nice and solid will significantly reduce the likelihood that your business will be a victim of theft or fraud.

5. Consider a holding company

There is always opportunity in the future and you need to be prepared for them to the best of your ability.

Holding companies can provide a number of benefits:

  • You can pay out corporate earnings of a subsidiary to a holding corporation tax-free
  • You can cash in the tax cost of shares you have acquired (if you paid high cost for them)
  • You can protect tangible assets from business risk

With the new dividend policies it’s important you protect Grip or high-tax rate dividends and to make sure that it’s possible to flow them through holding companies.

6. Review your estate plan

Take the time and energy to go through where you are currently and determine what you need to do to get to your desired future. This could be succession planning or a financial goal for retirement, either way you want to make sure you’re dealing with things really well.

It’s interesting…if you value businesses today versus 6 years ago, a value today may actually come in less because most businesses didn’t do as well in the last 5 years. That provides opportunities in the estate plan to do things like estate freezes and hold values at a lower amount so the future growth can be left to the next generation.

7. Enhance your business processes

Always be looking for ways to increase productivity, reduce costs, lower risk and increase profitability. Optimize your processes, analyze them and then eliminate processes that aren’t helping your business become more successful.

You need to implement processes that consistently increase your productivity. Look at your margins and determine things like whether certain systems should be streamlined due to a disproportionate ratio between profit and resources.

8. Managing enterprise risk

Consider a formal enterprise risk strategy that allows you to take those strategic risks to better your business. If you don’t take any risks, you will go backwards.

There always has to be some level of risk, it just needs to be managed risk.

You want to create a culture of risk awareness in the business. Enable better practices and better performances while establishing accountability that will allow for you to achieve balanced risk management.

Preparation Is The Key

Yes, it’s an old saying but preparation is truly the key to success. Poorly setup systems and processes in the beginning can mean big, expensive headaches later on. For this reason it is crucial that you meet with your advisor to ensure that you have systems that are conducive to growth.

“An ounce of prevention is worth a pound of cure.”

 

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